it's better than them trying to charge your business license fee on a new car. I am like REALLY. you want to charge me license to sell a car to me fee? no thanks, went to another dealership. It was 2xx$ or so.

By and large, your state laws tell the businessman what products he sells that he must collect taxes on. You need to check with the state bureau that implements those laws. Here in California, it's the Board of Equalization which , incidentally, does not require taxes be collected on labor. At least not yet.